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On June 6, 2021, the U.S. Senate passed the Merger Filing Fee Modernization Act of 2021. Co-sponsored by Senators Amy Klobuchar (D-MN) and Chuck Grassley (R-IA), the bill would increase filing fees for certain large transactions reported to the U.S. antitrust authorities under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (“HSR Act”). The bill would also

Senate Passes Bill to Increase HSR Filing Fees for Large Transactions

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On June 6, 2021, the U.S. Senate passed the <a href="https://www.congress.gov/bill/117th-congress/senate-bill/228" target="_blank">Merger Filing Fee Modernization Act of 2021</a>. Co-sponsored by Senators Amy Klobuchar (D-MN) and Chuck Grassley (R-IA), the bill would increase filing fees for certain large transactions reported to the U.S. antitrust authorities under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (“HSR Act”). The bill would also substantially increase budget appropriations for the Antitrust Division of the Department of Justice (DOJ) and the Federal Trade Commission (FTC). The bill – one of several recent legislative proposals intended to strengthen antitrust enforcement – remains subject to passage in the House of Representatives and must be signed into law by President Biden. Given broad support for the legislation across party lines, the bill seems likely to pass, illustrating the potential for additional bipartisan antitrust reforms on the horizon.<h4>Increased Filing Fees for Certain Large Transactions</h4>Currently, transactions reported under the HSR Act are <a href="/resources/insights/210203-ftc-hsr-filing-2021.html">subject to the following filing fees</a>. While the thresholds are adjusted annually based on gross national product, the fees have remained constant since 2000, despite the volume of HSR Act filings increasing significantly over time.<table cellpadding="0" cellspacing="0" border="1"><tbody><tr><td valign="top" width="312" bgcolor="#034193" style="width: undefined%; height: auto;">Transaction Value</td><td valign="top" width="108" bgcolor="#034193" style="width: undefined%; height: auto;">Filing Fee </td></tr><tr><td valign="top" width="312" style="width: undefined%; height: auto;">Less than $184 million</td><td valign="top" width="108" style="width: undefined%; height: auto;">$45,000</td></tr><tr><td valign="top" width="312" style="width: undefined%; height: auto;">$184 million or more, less than $919.9 million</td><td valign="top" width="108" style="width: undefined%; height: auto;">$125,000</td></tr><tr><td valign="top" width="312" style="width: undefined%; height: auto;">$919.9 million or more</td><td valign="top" width="108" style="width: undefined%; height: auto;">$280,000</td></tr></tbody></table>The new legislation would amend the HSR Act to (1) replace this framework with the six-tiered regime outlined below; (2) significantly increase fees for transactions valued at more than $1 billion up to 7 times current levels; and (3) decrease fees for transactions valued at less than $161.5 million. Beginning in 2022, fees would be adjusted annually according to percentage increases in the Consumer Price Index.<table cellpadding="0" cellspacing="0" border="1"><tbody><tr><td valign="top" width="312" bgcolor="#034193" style="width: undefined%; height: auto;">Transaction Value</td><td valign="top" width="108" bgcolor="#034193" style="width: undefined%; height: auto;">Filing Fee</td></tr><tr><td valign="top" width="312" style="width: undefined%; height: auto;">Less than $161.5 million</td><td valign="top" width="108" style="width: undefined%; height: auto;">$30,000</td></tr><tr><td valign="top" width="312" style="width: undefined%; height: auto;">$161.5 or more, less than $500 million</td><td valign="top" width="108" style="width: undefined%; height: auto;">$100,000</td></tr><tr><td valign="top" width="312" style="width: undefined%; height: auto;">$500 million or more, less than $1 billion</td><td valign="top" width="108" style="width: undefined%; height: auto;">$250,000</td></tr><tr><td valign="top" width="312" style="width: undefined%; height: auto;">$1 billion or more, less than $2 billion</td><td valign="top" width="108" style="width: undefined%; height: auto;">$400,000</td></tr><tr><td valign="top" width="312" style="width: undefined%; height: auto;">$2 billion or more, less than $5 billion</td><td valign="top" width="108" style="width: undefined%; height: auto;">$800,000</td></tr><tr><td valign="top" width="312" style="width: undefined%; height: auto;">$5 billion or more</td><td valign="top" width="108" style="width: undefined%; height: auto;">$2,250,000</td></tr></tbody></table> <h4>Increased Budget Appropriations for Antitrust Agencies</h4> While the FTC and the DOJ mainly draw resources from HSR Act filing fees, they also rely on budget appropriations from Congress to fund enforcement. In addition to increased filing fees, the bill proposes major increases in budget appropriations for both agencies. Under the bill, the FTC’s budget would increase to $418 million, a 19% increase over current levels and almost $29 million more than requested in <a href="https://www.reuters.com/technology/biden-seeks-11-jump-ftc-funding-big-tech-cases-loom-2021-05-28/" target="_blank">President Biden’s proposed budget</a>. The DOJ’s budget would rise to $252 million, 36% more than current levels and $51 million more than the Biden budget.<h4>Key Takeaways from Proposed Legislation</h4><ul><li>The Merger Filing Fee Modernization Act of 2021 passed the Senate with a super-majority and strong bipartisan support. It is likely to pass in the House of Representatives and be signed into law by President Biden in the near future.</li><li>Bipartisan support for the bill in the Senate underscores a broader consensus emerging around stronger U.S. antitrust enforcement. This consensus is reflected in several other proposals pending on Capitol Hill aimed at antitrust reform. In February 2021, Democratic Senator and chair of the Senate Subcommittee on Antitrust Amy Klobuchar introduced the <a href="/resources/insights/210211-far-reaching-bill.html">Competition and Antitrust Enforcement Reform Act of 2021</a>, which proposes major changes to the laws governing merger review, among other reforms. On June 11, a bipartisan group of lawmakers introduced several bills in the House of Representatives targeted at regulating large technology companies and digital platforms. On June 14, Republican Senators Mike Lee (R-UT) and Chuck Grassley introduced the <a href="https://www.lee.senate.gov/public/_cache/files/f0dae6bf-c180-48c6-9f2a-0c4025785086/team-act-one-pager.pdf" target="_blank">Tougher Enforcement Against Monopolists</a> (TEAM) Act, which would modify merger review standards, increase penalties for antitrust violations and consolidate antitrust enforcement in the DOJ. While there are important differences among these proposals, there is also considerable common ground, foreshadowing a real possibility of bipartisan antitrust reform on the horizon.</li><li>If the Merger Filing Fee Modernization Act of 2021 passes, companies undertaking mergers and acquisitions will need to factor increased fees into their deal structures and budgets. While HSR Act filing fees have been characterized by some lawmakers as a “drop in the bucket” when compared to the value of multibillion dollar transactions, fees at the upper range of the bill are by no means trivial. Moreover, these fees could even be triggered by routine or incremental investments that present no competition concerns (and require very little agency review) where the aggregate holdings of the buyer, as a result of the transaction, cross an applicable threshold.</li></ul>Raymond Rif and Jose L. Urteaga also contributed to this article.